Choksi Laboratories Ltd Management Discussions

We have pleasure in submitting the Management Discussion & Analysis Report on the Companys business.

1. Industry Structure and Developments

The Indian testing and laboratory services industry has witnessed steady growth over the past few years, driven by increased demand in sectors such as pharmaceuticals, food safety, environment, industrial products, and consumer goods. The focus on quality, regulatory compliance, and safety standards has further accelerated the need for accredited laboratory testing services.

The Government of Indias initiatives such as "Make in India", "Atmanirbhar Bharat", and stricter environmental and product safety norms are contributing to growth in the testing, inspection, and certification. Additionally, global supply chain requirements and export standards have increased the role of third-party labs in quality assurance.

2. Opportunities and Threats

Opportunities: l Increasing regulatory requirements across industries (FSSAI, BIS, CPCB, etc.). l Growth in pharmaceutical and biotech industries post-pandemic. l Export market requirements for compliance and certification. l Rise in awareness about food safety and environmental sustainability. l Scope for digitalization and automation in laboratory operations.

Threats: l High dependency on skilled manpower and technology. l Pricing pressures from unorganized players or low-cost competitors. l Rapid changes in regulatory requirements leading to compliance challenges. l Currency fluctuations impacting imports of high-end testing equipment.

3. Segment-wise or Product-wise Performance

The Company operates in multiple testing segments including: l Food & Water Testing: Increased volume due to regulatory emphasis and consumer awareness. l Environmental Testing: Growth driven by stricter environmental compliance norms. l Pharmaceutical Testing: Consistent performance, with growth from stability and analytical testing services. l Construction Material Testing: Modest growth in demand from real estate and interior design industries. l Calibration Services: Growth enhancement due to evolving needs of National and International scale at diverse industries.

4. Outlook

With increasing regulatory oversight, quality consciousness, and industrial growth, the analytical testing market is expected to maintain double-digit growth. The Company is well-positioned to benefit from this growth with its focus on quality, expansion of service offerings, accreditations, and investments in automation and technology. Continued focus will also be placed on developing client relationships and entering niche testing areas like microbiome, residue analysis, and trace metals.

5. Risks and Concerns

The primary risks include: l Delays in regulatory changes or approvals impacting service demand. l High capital investment required for technological upgradation. l Risks associated with client concentration in specific sectors. l Cybersecurity risks due to increasing reliance on digital platforms.

The Company mitigates these risks through diversification, continual staff training, internal audits, and robust IT infrastructure.

6. Internal Control Systems and Their Adequacy

The Company has a robust internal control system commensurate with its size and nature of operations. The internal controls ensure efficient use of resources, compliance with applicable laws, and reliability of financial reporting. Regular audits and management

ANNEXURE - I reviews ensure ongoing improvements in systems and processes.

7. Financial Performance with Respect to Operational Performance

In financial year 2024-25 we have generated the revenue of Rs. 4184.94 lacs as compared to Rs. 3685.92 Lacs. in the previous year. The Net profit before Tax for the year under review has amounted to Rs. 215.33 lacs as compared to previous year profit of Rs. 166.32 Lacs, the exceptional Items amounting NIL (previous year Rs. NIL), and Net profit after tax for the year is Rs. 152.33 lacs as compared to previous year profit of Rs. 110.98 lacs reflecting enhanced productivity and revenue realization.

8. Information Technology Systems and Cybersecurity

The Companys operations are highly dependent on robust IT infrastructure and systems. On May 22, 2025, the Company faced a ransomware cyberattack targeting its main servers, which caused temporary disruption in access to core systems, including those supporting financial reporting.

In response, the Company:

- Immediately activated its incident response plan - Engaged external cybersecurity experts - Restored data via secure backups - Reinforced IT controls and recovery protocols

The incident led to a short delay in finalization of financial results for FY 2024 25, which were subsequently approved after successful data recovery and completion of the audit process.

The Company continues to invest in enterprise-grade IT security solutions, periodic vulnerability assessments, staff training, and business continuity planning (BCP). These efforts are aimed at minimizing the risk of recurrence and ensuring the integrity and reliability of our IT environment.

9. Human Resources and Industrial Relations

Our personnel, in our opinion, are our most valuable assets and are essential to attaining both our vision and growth goals. Diversity, inclusivity, equal opportunity, non-discrimination, meritocracy, and freedom of expression are the cornerstones of our workplace culture. In order to provide the best possible working conditions for our employees, we regularly review our human resources practices.

10. Key Financial Ratios

Ratio	FY 24-25	FY 23-24	% Change	Explanation
Current Ratio	0.68	0.77	-11.56	NA
Debt-Equity Ratio	1.24	1.39	-11.14	NA
Debt Service Coverage Ratio	1.12	1.10	1.95	NA
Return on Equity Ratio	6.65	5.12	29.78	Due to more profitability as compared to previous year
Trade Receivables Turnover Ratio	3.86	3.49	10.61	NA
Trade Payables Turnover Ratio	2.90	4.16	-30.32	Due to increase in trade payables
Net Capital Turnover Ratio	-5.53	-8.58	-35.50	Due to increased turnover and profitability
Net Profit Ratio	3.65	3.02	20.55	NA
Return on Capital Employed	20.35	21.02	-3.21	NA

Note: Explanation is provided for any significant changes i.e. 25% or more in the above ratios.

11. Cautionary Statement

Statements in this report describing the Companys objectives, expectations, or forecasts may be forward-looking statements based on certain assumptions and expectations of future events. The actual results could differ materially from those expressed or implied. Important factors that could influence companies operation include various global and domestic economic factors.

For and on behalf of the Board of Directors

Choksi Laboratories Limited

 

Sd/-

Sunil Choksi

Chairman &Managing Director

DIN-00155078

 

Place: Indore

Date: 13.08.2025